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NAIROBI, Oct 12 (Reuters) – Somalia does not plan to nullify oil and gas exploration contracts made in recent years in favour of those that were signed prior to the toppling of the government in 1991, a senior state official said on Friday.

There are concerns by investors that deals signed by companies in Somaliacould be affected now that it has a new government, after electing a new permanent president for the first time in over 20 years.

When the government of the Horn of African nation fell in 1991, around a dozen companies, including many multinational oil and gas majors, had licences to explore Somalia.

Abdullahi Dool, Somali`s deputy energy minister, said it was

too soon for the country to decide how it would handle a tangle of exploration licences, which grant various companies rights to explore overlapping areas.

Dool said the country would not only honour contracts signed prior to 1991 with oil majors including Royal Dutch Shell , BP and Chevron, but also new ones.

He criticised comments by Abdullahi Haider, a senior adviser to Somalia`s Ministry of Energy, that only oil licences agreed before 1991 would be upheld.

Though interest in exploring for hydrocarbons in east Africa has been high recently, as a result of big oil and gas discoveries in neighbouring Kenya and other regional countries such as Uganda and Tanzania, Somalia has had a complicated relationship with companies looking to cash in on the boom.

In the past two decades, two semi-autonomous regions Puntland and Somaliland, have cropped up in the northern part of Somalia, and granted their own licences to explorers.

In some cases, they have awarded exploration contracts to separate companies to search the same swath of land.

Dool said any conflicting licence awards would be settled once a new Somali cabinet is in office by November 6.

“I`m sure all of this will be reviewed,” said Dool.

Independents, who have a high-risk tolerance and are small enough to cope with rapid change, such as Africa Oil and Horn Petroleum believe their contracts with regional Somali authorities will still remain valid.

“Horn Petroleum remains confident that our oil agreements continue to be valid,” said Keith Hill, chairman and CEO of Africa Oil and chairman of Horn Petroleum.

Somalia plans licensing round early next yearIain Esau London
Upstream
October 05, 2012

Government plans to offer onshore and offshore open acreage as well as blocks relinquished under force majeure since start of civil war

The newly installed federal government of Somalia plans to begin a licensing round in early 2013 covering open acreage both onshore and offshore. The round will also offer any acreage relinquished by oil companies with blocks in the war-torn country that have been under force majeure since 1991.

BP, Canadian Natural Resources, Chevron, ConocoPhillips, Eni, Murphy Oil, Neste, Shell and Talisman Energy all held acreage before 1991 and will be invited to Mogadishu to establish if they want to retain some or all of these blocks under proposed new production sharing agreements instead of the old royalty-based fiscal regime.

Abdullahi Haider, senior adviser at Mogadishu`s Ministry of Water, Energy, Petroleum & Mineral Resources, said some companies have already been in touch with the new federal government, established on 10 September as a successor to the transitional government.

Haider said Shell, with pre-1991 acreage covering a huge swathe of offshore tracts in the Indian Ocean, has already been in contact with the new government..

He said formal talks will take place between the government and the 10 oil companies over the next six to 12 months.

Any blocks relinquished by these companies will be offered in the licensing round.

Haider suggested bids will be taken on the current open acreage first, followed by later bids on relinquished blocks.

He said the government, which is being advised on the round by Norton Rose and IHS, has provisionally split the blocks into 5000-square-kilometre tracts.

The initial terms of PSCs will likely comprise a seven-year exploration period followed by a 20 or 25-year production period.

However, Haider pointed out that all these proposals, including the 2008 Petroleum Act, need to be approved by Somalia`s prime minister and petroleum minister, both of whom should be formally appointed within days.

A fully-formed cabinet also needs to approve the revived nation`s constitution.

Hassan Sheikh Mohamud heads the new government as president.

Haider, speaking at a CWC event, said petroleum jurisdiction issues will largely be resolved by the new constitution, although certain issues – such as regional revenue sharing – would have to be sorted out through discussions.

He said blocks awarded by semi-autonomous regions such as Puntland – which may not recognise the new government – “have not been approved” byMogadishu, and once the new petroleum laws have been adopted, “any autonomous region will not be able to handle or deal with petroleum issues, it will have to be the federal government”

. Haider said agreements such as that signed by Horn Petroleum “are null and void”. Mogadishu also wants to hold talks with Kenya`s government over what it claims is a disputed maritime border. He said an area of 120,000 square kilometres is under dispute.

On the Kenyan side, said Haider, concessions held by Eni, Statoil and Anadarko Petroleum are affected by the dispute as is a block on the Somali side awarded to Total in 2000.

Sumayya Athmani, managing director of Kenya`s state-owned oil company NOCK, said that as far as her government is concerned there is no dispute, although she did point out that she is interested to hear the new Somali government`s view on the subject.

LONDON, Oct 2 (Reuters) – Somalia, hoping to share in East Africa`s oil and gas boom, has invited back international oil companies that held exploration licences before civil war broke out two decades ago, an adviser to the government said.

Abdullahi Haider, a senior adviser to Somalia`s Ministry of Energy, said the country would honour contracts signed prior to 1991 with oil majors including Royal Dutch Shell, BP and Chevron.

“They will be given priority,” Haider said of the companies that had signed exploration deals before the conflict.

Somalia will offer onshore and offshore exploration blocks to companies in a licencing round early next year, Haider added, a process that would enable new companies to come to the country as well as those with permits from the 1980s.

“I`ve seen so many people who are very much interested like Shell, like Chevron. I`ve met them here and they expressed very high interest,” he said in an interview on the sidelines of a conference in London on Tuesday.

The government had sent a letter to the companies inviting them to come and negotiate on new contract terms, he added.

Somalia inaugurated a new president in mid-September in the first such ceremony for over 20 years, prompting hopes that it had turned a corner after a regionally-brokered, United Nations-backed effort to end fighting in which tens of thousands of people were killed.

The country hopes exploration by major oil companies will enable it to participate in the excitement over a string of discoveries in East Africa that have aroused expectations the region will become an important energy supplier.

Should companies choose to return, they will negotiate with the government over converting the old royalty-based contracts into production sharing agreements.

Any companies that signed oil exploration deals after 1991 could negotiate but would not be given priority, he said.

Somalia also hopes to resolve a maritime border dispute with its southern neighbour, Kenya.

The disagreement between the two has threatened to upend some exploration rights that Kenya has granted to oil and gas companies including France`s Total and Texas-based Anadarko.

Somalia`s new central government plans a comprehensive revision of all current oil and gas concessions including oil permits signed in the pre-1991 era, a senior government official said Monday.

The Ministry of Energy`s senior adviser, Abdullahi Haider, said the government would honor contracts held by companies as long as those agreements were converted into Production Sharing Contracts under a new petroleum law.

The permits held by Shell, ConocoPhillips, Chevron, BP and Eni were awarded the exploration concessions in the 1980s before leaving in 1991 when warlords toppled dictator Mohamed Siad Barre and the country descended into lawlessness.

“The companies will have first priority but if they say they are not interested, then those concessions will go to international bidding,” Haider told Platts on the sidelines of an industry conference.

The government hopes to hold a bidding round for around 300 onshore and offshore blocks of an average of 5,000 sq km in early 2013, he said.

Haider said most of the companies, including Shell and ConocoPhillips, have already had contact with the government. “It is a new beginning for all of us,” he said.

The Transitional Federal Government (TFG) of Somalia, which was temporarily set up eight years ago to transition the country into permanent statehood, came to an end earlier last month.

Haider also said a new petroleum minister would be appointed within days.

While Mogadishu says it still recognizes permits awarded prior to 1991, it does not consider concessions acquired post-1991 valid, which include licenses granted to companies such as Horn Petroleum, a unit of Canada`s Africa Oil.

Separately, Haider said talks continue with the Kenyan government over the awarding of contested offshore oil and gas exploration blocks to Statoil, Anadarko, Total and Eni because the permits encroach on Somalian territorial waters.

Kenya claims that the border runs east from the point at which the land border meets the offshore while the Somalian authorities contest this line and claim the boundary should extend perpendicular to the coastline.

Like much of the country`s borders, Kenya`s Indian Ocean boundary withSomalia has not yet been demarcated.

Kenya and its East African neighbors have witnessed a surge of interest from foreign investors in recent years, fueled by oil and gas discoveries.